Bid & Tender
Sembcorp Salalah of Oman Plans Refinancing $600mn Debt

Date : Aug 14, 2015

Oman-based Sembcorp Salalah Power and Water, an independent water and power producer, is seeking to refinance about $600 million of loans at better terms to take advantage of interest cost.

 

HSBC Holdings is advising the company on the financing, originally raised from about six banks, according to sources.

 

However, an official at the Salalah-based company said that the discussions are at an early stage and the company does not want to make any comment right now. It has to be approved by the shareholders and Oman Power and Water Procurement (OPWP) Company. Also, there are several procedures involved in arranging the fund.

 

Presently, the company’s debt-equity ratio is 74:26, which is equivalent to around OMR250 million debt and a shareholders’ equity capital of OMR84 million. However, the shareholders’ fund is standing at OMR 105.26 million.

 

Sembcorp Salalah has a contracted power capacity of 445MW and a contracted water capacity of 15MIGD.

 

Sembcorp Salalah, 40 per cent owned by Singapore’s Sembcorp Utilities, spent about $1 billion to build the power plant in the Dhofar province, which began full commercial operation in May, 2012.

 

Sembcorp Salalah contributes more than 70 per cent of the total electricity demand and 100 per cent of the desalinated water demand in the Dhofar Governorate by end-June 2015. Power contributes 52 per cent (excluding fuel charge) and water contributes 22 per cent to overall revenue.

 

The company's promoters offered 35 per cent of their holding at a price of OMR 1.590 per share through a one-month long subscription between August and September, 2013.The company’s OMR53 million-IPO was oversubscribed by 8.3 times, making it one of the largest share offers in Oman in recent years.

 

Another power firm in Saudi Arabia is also seeking to refinance its debt at lower costs, according to two people with knowledge of the plans.

 

Dhuruma Electricity, jointly owned by state-controlled Saudi Electricity and GDF Suez Group, is seeking a cut in interest rates of about one percentage point on $1.5 billion of loans, said the people, asking not to be identified because the information is private. The Riyadh PP11 Independent Power Project, as the company is also known, wants to extend loan maturities, they said.

 

Companies across the six-nation Gulf Cooperation Council (GCC), which includes Saudi Arabia, the United Arab Emirates and Oman, have sought to cut interest rates on their loans over the past two years as borrowing costs declined and banks with excess cash competed to lend. Dubai Duty Free, one of the world’s biggest airport retailers, cut the price on $2.5 billion of loans last year as rates in the loan market were very favourable, it said.

 

Riyadh PP11 commissioned a 1,729 megawatt gas-fired power plant in 2013 about 125 kilometres (78 miles) west of Riyadh.